Reducing Medical Spending of the Publicly Insured: The Case for a Cash-out Option

Svetlana Pashchenko and Ponpoje Porapakkarm

American Economic Journal: Economic Policy, 2019, vol. 11, issue 3, 390-426

Abstract: Individuals' medical spending has both necessary and discretionary components, which are not, however, separately observable. This paper studies ways to improve upon existing public health insurance policies by using a framework where both the discretionary and necessary components of medical spending are explicitly modeled. First, using a simple theoretical framework, the paper shows that the key to reducing discretionary medical spending is to introduce a trade-off between nonmedical and medical consumption. Next, using a rich quantitative life-cycle model, the paper shows that this trade-off can be successfully implemented by introducing an option to substitute public health insurance with cash transfers.

JEL-codes: D91 G22 H51 I13 I18 I38 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pol.20160433
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pol.20160433 (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20160433.data (application/zip)
https://www.aeaweb.org/doi/10.1257/pol.20160433.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/pol.20160433.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Reducing Medical Spending of the Publicly Insured: The Case for a Cash-Out Option (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejpol:v:11:y:2019:i:3:p:390-426

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().